The current ratio and the quick or acid-test ratio may be too high for the overall good of the business.

Question

Quizplus · Accepted Answer

If the current ratio and quick ratio are too high, it may indicate that the company is not effectively utilizing its assets to generate revenue. It could mean that the company has excessive cash reserves or inventory that is not moving. This could lead to missed opportunities for investment or expansion, and potentially lower returns for shareholders. Therefore, a high current ratio and quick ratio may not always be beneficial for the overall health of the business.

The Current Ratio and the Quick or Acid-Test Ratio May